Power Grid to invest Rs 18,500 cr in FY12

Mumbai: Power Grid Corp of India will invest about Rs 18,500 crore ($4.1 billion) this year, 55% higher than its target last year, to add to the electricity-hungry country’s transmission capacity, its chairman told Reuters on Wednesday.

Power Grid, with a market value of $10 billion, cut its capex target in the fiscal year that ended in March by 8% to Rs 11,900 crore when power projects in India were delayed as they awaited environmental clearances and coal allocations.

The company’s capex target for this fiscal year exceeds the forecasts of brokerages, which expect Power Grid to invest Rs 15,000-18,000 crore.

Indian power producers including NTPC and Tata Power also plan significant increases in their capex this year.

The firm, whose $1.7 billion share sale in November was nearly 15 times subscribed, plans to invest $27 billion during the Indian government’s 12th five year plan, beginning in April 2012.

Power Grid is also looking to bolster its revenue by leasing its towers to phone companies, and through overseas consulting contracts.

Asia’s third-largest economy is looking to cut a peak-hour power deficit of about 12%. India’s electricity demand is expected to rise 56% to 1,400 billion kwh by the fiscal year ending in March 2017.

Power Grid hopes to complete transmission projects worth Rs 11,000 crore in the current fiscal year, a jump of 37.5% from a year ago, chairman S. K. Chaturvedi said in a phone interview.

Power Grid, which carries more than 400 billion kilowatt hours, or 51% of India’s electricity, saw a year-on-year increase of 9.5% in its total transmission line assets in the recently completed year, data on its web site showed.

The firm mainly earns revenue from transmission fees from power producers and is looking to expand its revenue opportunity by leasing out some of its 150,000 transmission towers to telecom carriers.

It recently leased towers in the states of Himachal Pradesh, Punjab and Jammu & Kashmir to Macroquil, and plans a second phase of leasing towers for telecom in the next six months.

“We have awarded the contracts for tower leasing, so revenue will start coming from that segment also,” Chaturvedi said.

The firm, which has also done power transmission projects and consultancy contracts in Afghanistan, Bhutan, Bangladesh, UAE, Nepal, Sri Lanka and Nigeria, is looking to expand its consulting business into new markets.

“Discussions are going on with Kenya, Nigeria and Cambodia,” Chaturvedi said.

On Tuesday, Power Grid posted a 32% jump in its net profit to Rs 270 crore on revenue of Rs 840 crore.

According to Thomson Reuters Starmine data, 12 brokerages recommended the stock with ‘strong buy’ rating, while five have ‘buy´ with a mean target price of 114.90 rupees per share.

Power Grid shares have shed 2.6% since its follow-on share late last year, and are down 0.3% since 1 January, while the benchmark Sensex has lost 12.7% year-to-date.

At 03:13 p.m. shares were down 1.82% at Rs 97 on a volume of 2.9 million shares, while the benchmark index was down 0.91%.